4. Fibonacci Level Breakout

Entry Logic

Price closes beyond a significant Fibonacci retracement or extension level (e.g., 0.382, 0.618, 1.272, 1.618). Confirmation is a subsequent candle closing beyond the level. Timeframe is 5-minute or 15-minute. Entry is at the confirmation candle's close. Market condition is trending.

Exit Logic

Target is the next Fibonacci level. Scale out 50% at 1R. Trailing stop 0.7 ATR from prior candle high/low. Signal failure: price re-crosses Fibonacci level. Time expiration: no target reached within 90 minutes. Momentum loss: 3 candles fail to extend.

Stop Loss Structure

Hard stop 5-15 ticks beyond the broken Fibonacci level. Max dollar loss $225 per trade. Max percent loss 1.5% of account. Structural stop at the swing point used for Fibonacci.

Risk Management Framework

Risk 1% of account per trade. Daily loss limit 3%. Weekly loss limit 8%. R:R requirement 1.3:1 minimum.

Position Sizing Model

Size based on stop loss distance. Volatility adjustment: reduce size for wider stops. Conviction sizing: 1.2% risk for A setups. Scale in: no. Scale out: yes, at 1R.

Trade Filtering

Market conditions: clear impulse move, moderate volatility. Setups: well-defined Fibonacci levels from clear swing points. Instruments: ES, NQ, CL, EURUSD. Time restrictions: avoid pre-market/post-market. Chop avoidance: avoid periods of low range. News avoidance: avoid 15 minutes before/after major economic releases.

Context Framework

Trend direction: breakout aligns with the higher timeframe trend. VWAP relationship: price breaks above/below VWAP. MA relationship: price breaks 20-period EMA. Range location: breakout from retracement or consolidation. Higher TF: 30-minute chart confirms Fibonacci validity.

Trade Management Rules

Move to breakeven after 0.7R profit. Scale out 50% at 1R. Do not add size. Fast moves: tighten stop to 0.3 ATR. Slow moves: allow 0.6 ATR.

Time Rules

Optimal window: 9:45 AM - 11:15 AM EST, 1:15 PM - 2:45 PM EST. Times to avoid: 8:30 AM - 9:45 AM EST, 12:00 PM - 1:00 PM EST. Session notes: New York open, early afternoon.

Setup Classification

A+: Breakout with strong volume, clear Fibonacci level, aligned with higher timeframe trend. A: Good volume, clean break, generally aligned with trend. B: Average volume, some hesitation, unclear trend. C: Low volume, weak Fibonacci level, no trend alignment.

Market Selection Criteria

Instruments: ES, NQ, CL, GC. Volume: high liquidity. Volatility: ATR(14) > 0.4% of price.

Statistical Edge Metrics

Win rate: 45-50%. Avg win: 1.5R. Avg loss: 1R. Profit factor: 1.1-1.3. Expectancy: 0.15-0.25R.

Failure Conditions

False breakout, price reverses at level. Stalls at level. Low volume.

Psychological Rules

Draw Fibonacci levels accurately. Do not force trades. Trust the process.

Advanced Components

Regime detection: use MACD to confirm momentum. Filters: candlestick patterns at level. Correlation: monitor related instruments. MTF alignment: 1-hour chart showing trend continuation.

Location

Strongest: After a strong impulse move. Weakest: In choppy, range-bound markets.